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Friday, October 31, 2014

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Home sales fall in second quarter, but reasons for optimism

Published 9:45 am, Saturday, August 2, 2014

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  • A home for sale at 2 Balsam Circle in Shelton, Conn. Photo: Autumn Driscoll / Connecticut Post

    A home for sale at 2 Balsam Circle in Shelton, Conn.

    Photo: Autumn Driscoll

 

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Second-quarter home sales and dollar volume declined in the second quarter in Fairfield County compared with the same period last year. But based on other indicators, officials at William Pitt and Julia B. Fee Sotheby's International Realty are upbeat about the market's future.

Fairfield County experienced an 8 percent decline in closed-unit sales and a 6 percent decline in closed-dollar volume compared to the second quarter of 2013, according to Paul Breunich, William Pitt Sotheby's president and CEO. But closed days on the market have dipped to their lowest level in three years at 95 days.

"Properties that are priced aggressively and beautifully presented are those that are typically finding their buyers in this time frame," Breunich said, noting last year's second quarter was the strongest quarter in many years. "The fundamentals are there. Consumer confidence is at its highest point since January of 2008, and unemployment levels are at their lowest since 2007."

The Darien housing market is benefiting from the improvement, said Bruce Baker, a real estate agent with William Pitt Sotheby's who focuses on the Darien-Rowayton market.

Though sales from January through July 15 totaled 136 in Darien compared with 156 for the same time period last year, Baker blamed some of the decline on the severe weather early in the second quarter. He said the market has rebounded with more listings in June compared with June of last year and a jump in pending sales.

"Our supply began to catch up in April, and now we've caught up in the number of listings. Days on the market through July 15 is 140 days compared with 134 days in 2013," said Baker, who has been a real estate agent since 2005. "My gut is that we'll finish the year flat with 2013 (in sales) or finish the year a little better. Darien is a destination place for people with its schools, beaches and community."

People who live in Darien want to remain in town and tend to purchase more expensive homes over the years, Baker said. It is a trend that he has followed in his 35 years as a resident, buying four homes.

"It's a real good thing when people move up in a town. You're seeing people a little more confident about moving up to the next tier," Baker said, noting the average sales price was $1.58 million in 2013 through July 15, compared with $1.59 million for the same period in 2014. "The amount of pending sales is substantial, so it feels we'll pick up quickly. If a house looks right and is updated, buyers gravitate more to it rather than an older home that needs improvement."

The Connecticut market saw robust seasonal gains in the second quarter, with closed sales exceeding 7,400 transactions and median sales prices increasing marketwide versus last quarter, said Candace Adams, president and CEO of Berkshire Hathaway Home Services New England.

Pent-up demand from the first quarter led to an 11.3 percent decrease of days on market to 140 days with buyers entering the housing market at all price points, Adams said.

Overall, the average cost for Connecticut's homes remained unchanged year over year. Signed contracts for single-family homes decreased 19.6 percent compared with last year, but increased 13.3 percent from last quarter.

Prices have remained steady this quarter and are at parity with second-quarter prices for the past three years, according to data supplied by William Pitt Sotheby's, which said the stabilized prices represent a critical underpinning to market confidence and growth.

"There has been a steady sales picture these past few months that has been obscured by the rapid rise in inventory during April and May," said William Larkin, manager of William Pitt Sotheby's New Canaan brokerage.

"Buyers have been actively in the market, but the competition to sell a property is stiffer right now than it has been in recent memory. With proper positioning and marketing these homes will all successfully find their buyers."

Connecticut has seen a 6.7 percent increase in the number of sold luxury residences in 2014 compared with 2013, characterized by sales of more than $2 million. Year-over-year sales have shifted toward more expensive homes with the percent of sold homes for more than $5 million up from 7.7 percent of the market share in second quarter 2013 to 12.8 percent this quarter, Berkshire Hathaway reported.

"Sellers waited to put properties on the market until the weather improved this year, with a majority of the new inventory coming to market in June," Adams said. "The inventory exists in the luxury market for the highly discriminating buyer with over 1,000 homes priced over $2 million currently on the market, approximately 80 percent of them located in Fairfield County."

While on an overall basis Fairfield County housing activity has leveled off this quarter, luxury sales have experienced an uptick in activity, Breunich said, as sales of homes priced in the $3 million to $4.99 million range, as well as homes valued $5 million and higher have risen by 25 percent and 33 percent, respectively, versus the second quarter of 2013.

Year-to-date 54 sales of homes have been valued between $3 million and $4.99 million, which represents a 42 percent increase, according to Pitt Sotheby's data, and 33 sales have been over $5 million in 2014, which is a 27 percent improvement over a year ago.

In the ultra-luxury segment, many of the sales are in the $6.5 million to $9 million range and are spread across multiple towns, William Pitt Sotheby's reported.

Greenwich continues to dominate the upper-end market with 15 sales this quarter and 25 for the year to date. New Canaan, Darien and Westport represented the vast majority of other towns with a meaningful number of high-end sales during 2014.

"There's a lot of activity in higher-priced homes again. That's economically driven," said Nick Perna, a Ridgefield-base economist and economic adviser to Waterbury-based Webster Bank. "If you're doing well, you're doing very well. The improvement in luxury home sales is an indication of the growing wealth of high-end wage earners. Corporate profits are up over 50 percent before the start of the recession, while jobs are up only slightly. We have an increasing inequality in the U.S., and this is a manifestation of that."

Perna was heartened to learn of an improvement in inventory and prices, albeit slight.

"Days on the market are falling which is a very good sign," he said. "It reflects that more people are willing to put their toes in the water. Prices are rising but not terribly fast." Perna said the gradual housing-market improvement in the county is a reflection of the improving job market.

He cited June state labor department statistics showing job growth of 1.8 percent in the Stamford-Bridgeport region in June, compared with June 2013, and a 0.7 percent improvement in the Danbury area, compared with an overall state job growth of 0.3 percent.

"It says that Fairfield County is outperforming the state as a whole," Perna said.